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I  The  ABOLISHMENT  of  \ 
I  GENERAL  AVERAGE  I 


I    B   y       M    . 


HARRISON! 


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THE  ABOLISHMENT  OF 
GENERAL  AVERAGE 


By    M.    C.    HARRISON 

SAN    FRANCISCO 


COPYRIGHT.    1915.    BY    M.    C.    HARRISON 

Copenhagen  1 9 1 6  A.  Pauill 


San  Francisco,  Cal.,  October,  1915. 

In  view  of  the  completion  of  the  Panama  Canal — the  master- 
piece of  human  constructive  help  to  the  Maritime  Commerce  of  the 
world,  I  deem  it  an  auspicious  moment  to  propose  the  abolishment 
of  general  average. 

Commerce  by  sea  has  been  fettered  by  this  growing  land  bar- 
nacle for  nearly  three  thousand  years.  It  was  useful  prior  to  the 
introduction  of  marine  underwriting,  but  has  served  its  time,  and 
should  not  be  allowed  to  remain  as  a  drag  upon  the  interests  of 
mankind. 

If  my  suggestions  meet  with  favor,  I  shall  be  partly  repaid  by 
the  thought  that  the  saving  thus  effected  is  constructive  in  its  na- 
ture, and  that  it  may  aid  in  the  upbuilding  of  our  maritime  com- 
merce, to  which  my  whole  life  has  been  devoted. 

'^/^  M.  C.  HARRISON 


Page  two 


IN  presenting  the  following  argument  and  plan  for  the  abolish- 
ment of  general  average  I  do  so  with  a  full  appreciation  of  the 
justice  rendered  to  all  parties  in  maritime  ventures  from  the  time 
the  custom  began  with  the  Phoenicians,  up  to  the  present,  but  I  have 
also  come  to  believe  that  the  requirements  of  modern  commerce  are 
such  as  to  demand  the  abolishment  of  the  system  completely. 

There  are  three  chief  reasons  for  doing  so: 

First — The  majority  of  the  parties  interested  in  maritime  ven- 
tures at  the  present  day  do  not  understand  the  system  of  general 
average,  and  it  is  so  intricate  and  cumbersome  that,  in  the  nature 
of  things,  it  is  not  possible  for  them  to  gain,  in  the  ordinary  chan- 
nels of  commerce,  even  a  fair  understanding  of  its  workings. 

Second — The  amount  of  work  required  by  various  interested 
parties  is  getting  too  great. 

Third — The  expense  is  too  enormous. 


826028 


Pa^e  three 


FIRST— LACK  OF  UNDERSTANDING 
OF  SUBJECT 


The  majority  of  shipowners  and  cargo  owners  who  have  some 
understanding  of  the  subject  merely  know  that  where  a  sacrifice  is 
made  for  the  interests  of  all  concerned,  that  a  general  average  under- 
takes to  equalize  the  burden  so  that  the  property  of  no  one  party 
shall,  in  the  end,  suffer  more  than  the  property  of  another  party. 
The  broad,  general  basis  of  general  average  is  the  same  throughout 
the  world,  but  the  details  of  adjustments  are  quite  different  in  the 
various  countries  that  have  the  majority  of  interests  at  sea.  It  is 
not  the  same  in  all  of  the  main  particulars  in  any  two  countries 
which  have  large  interests.  It  has  been  the  dream  of  people  in- 
terested in  maritime  commerce,  including  marine  underwriters, 
for  many  decades,  of  having  the  laws  of  the  principal  nations  of 
the  world  on  the  subject  of  general  average,  made  to  agree  in  all  the 
main  particulars,  and  although  many  conferences  between  inter- 
ested parties  have  been  held,  it  never  has  been  found  possible  to  so 
arrange  it. 

Hence,  a  ship  bound  from  England  to  the  United  States,  having 
necessity  for  general  average,  is  bound  to  have  the  adjustment 
drawn  according  to  the  laws  of  the  United  States,  but  even  in  such 
a  case  it  is  modified  by  the  contract  of  affreightment,  which  may 
provide  for  some  special  rule  which  must  govern.  When  the  same 
ship  starts  with  a  return  cargo  from  the  United  States  to  Great 
Britain  and  a  general  average  becomes  necessary,  the  law  of  Great 
Britain  must  rule,  but  even  in  this  case  the  B/L  issued  in  America 
may  contain  special  clauses  which  will  modify  the  subject  and  such 
must  control,  provided  always,  of  course,  they  are  not  against  public 
policy. 

One  can  then  gather  a  fair  idea  of  the  amount  of  confusion  that 
might  exist  in  a  case  where  a  ship  starts  from  one  country  and  is 
intending  to  pass  through  two  or  three  ports  of  different  nationali- 
ties with  cargo  for  each,  should  a  general  average  become  necessary 
before  arrival  at  the  first  port.  It  often  requires  several  different 
adjustments.  This  is  also  the  case  when  a  ship  starting  from  a  port 
in  one  country  to  a  port  in  another  country  meets  with  disaster 
and  returns  to  the  original  port,  and  there  ends  the  voyage  with 
regard  to  certain  parts  of  the  cargo,  but  sends  forward  the  remain- 
ing part;  the  adjustment  for  the  part  disposed  of  at  the  original 
port  will  be  adjusted  according  to  the  laws  of  that  port  while  the 

Page  four 


part  forwarded  will  be  adjusted  according  to  the  laws  of  the  port 
of  destination.  Numerous  instances  can  be  mentioned  of  the  diffi- 
culties that  are  encountered  in  properly,  legally,  and  equitably  ad- 
justing general  averages  under  all  circumstances. 

Few  countries  have  statutes  on  the  subject;  it  is  mostly  governed 
by  precedent,  custom,  and  sometimes  rules  made  by  underwriters. 
It  can  be  easily  seen  that  a  general  average  adjuster  must  be  a  man 
of  large  experience  and  learning  as  well  as  judgment;  and  even  then 
adjustments  are  very  often  disputed  because  underwriters,  them- 
selves men  versed  in  the  subject,  cannot  always  agree  with  the  ad- 
juster, nor  in  fact,  with  each  other,  and  litigation  often  results;  and 
there  being  no  special  tribunal  fixed  in  the  chief  countries  of  the 
world  to  pass  upon  this  particular  subject,  controversies  come  be- 
fore courts  who  have  even  less  learning  than  the  adjusters  and  the 
underwriters,  on  the  subject,  and  as  a  result  curious  and  unusual 
decisions  are  added  to  the  long  list  of  confusing  precedents,  and  it 
is  not  to  be  wondered  that  less  than  one  in  a  hundred  of  the  ordi- 
nary shippers  of  cargo  can  claim  to  know  anything  at  all  on  the 
subject  of  general  average,  a  law  by  which  they  must  abide,  how- 
ever; and  it  is  perhaps  safe  to  say  that  not  one  underwriter  in  ten 
could  form  a  correct  conclusion  upon  the  majority  of  the  adjust- 
ments put  before  him  for  settlement.  The  result  is  that  in  most 
cases  collections  are  made  as  requested,  because  neither  shippers 
nor  underwriters  understand  it  fully  enough  nor  have  large  enough 
individual  interest  to  contest. 

The  system  is  further  complicated  by  the  constant  addition  of 
new  elements  of  expense,  which  in  Ihe  years  gone  by,  were  never 
entered  in  general  average,  so  that  the  man  who  yesterday  may  have 
been  well  versed  in  the  law,  may  be  today  behind  the  times. 

I  know  of  no  commercial  transaction  so  little  understood  or  so 
complicated.  The  abolishment  of  the  system  will  save  a  grent  waste 
of  time,  especially  to  marine  underwriters  upon  whom  the  loss  falls 
eventually,  as  there  is  no  branch  of  their  business  wliich  requires 
so  much  study. 


Page  five 


SECOND— AMOUNT  OF  WORK 


The  average  successful  ship  nowadays  is  growing  larger  and, 
therefore,  increases  the  size  of  cargoes.  The  exchange  of  com- 
modities between  countries  is  getting  greater  all  the  while,  as  the  de- 
mand increases  for  luxuries  and  necessities.  The  number  of  ship- 
pers in  all  directions,  is  getting  greater,  which  is  constantly  drawing 
into  maritime  commerce,  people  heretofore  dealing  only  with  inland 
commerce.  Therefore,  when  a  large  vessel  gets  in  a  situation  re- 
quiring sacrifice  of  either  property  or  money  for  the  preservation 
of  the  ship  and  the  cargo,  it  means  the  instant  requirement  of  an 
adjuster  and  a  large  force  of  clerical  help  to  secure  the  necessary 
data  upon  which  the  adjustment  later  on  will  be  based. 

The  first  step  is  to  notify  each  and  every  shipper  of  cargo,  that 
a  sacrifice  or  expenditure  has  been  necessary  in  order  to  save  the 
venture,  and  to  request  from  the  shipper  certain  data  as  to  his 
cargo  and  the  value  thereof. 

The  second  step  is  to  draft  and  distribute  to  each  owner  of  cargo 
an  average  bond  which  must  be  signed  by  the  proper  party:  Fol- 
lowing this,  the  owner  of  the  cargo  is  either  required  to  make  a  de- 
posit on  such  an  estimate  as  the  adjuster  may  think  will  cover  the 
assessment  in  the  end,  or  he  is  required  to  furnish  a  satisfactory 
guarantor  that  his  proportion  will  be  paid  promptly  when  de- 
manded. Security  to  the  satisfaction  of  the  adjuster  having  been 
given,  the  next  step  is  to  receive  the  cargo  and  to  ascertain  its  con- 
dition. The  character  of  the  damage  whether  by  a  sacrifice  or  by 
an  accident,  must  be  looked  into  in  respect  of  every  individual 
package  on  board  the  ship,  and  the  part  damaged  by  a  sacrifice 
must  be  carefully  noted  and  the  amount  of  such  damage  agreed  be- 
tween the  adjuster  and  the  owner  of  the  cargo,  in  order  that  the 
owner  may  be  credited  with  such  allowance  as  will  equal  the  value 
sacrificed. 

This  requires  the  service  of  a  great  many  experts  in  the  multi- 
tudinous lines  of  goods  that  are  on  board  the  ship.  After  the  agree- 
ment has  been  made  in  each  individual  case,  the  next  step  is  to 
ascertain  the  value  of  cargo  which  is  not  entitled  to  any  allowance, 
as  well  as  the  cargo  which  is  entitled  to  an  allowance.  Each  indi- 
vidual package  must  be  valued  in  order  that  a  basis  may  be  had  for 
charging  the  proportion  payable  by  each  partj'  whose  property  has 
been  saved.  The  damages  to  the  ship  must  be  agreed  upon  or  re- 
paired and  the  cost  ascertained  and  the  valuation  of  the  ship  in 

Page  six 


the  condition  in  which  it  was  saved  must  be  agreed;  claims  made 
bj'  cargo  owners  for  the  sacrifice  to  each  of  the  various  packages 
of  cargo  must  be  figured,  extended,  verified  and  approved.  In 
the  end,  the  adjuster  has  enough  w^ork  on  hand  in  detail,  as  well  as 
in  the  decision  of  close  points  as  to  whether  certain  items  are  prop- 
erly chargeable  to  general  average  or  not — on  the  ordinary  eiglit 
or  ten  thousand-ton  ship — to  keep  the  case  in  process  in  his  office 
for  a  length  of  time  usually  two  to  five  years.  After  the  adjuster 
has  finished  his  decision  and  voluminous  calculations,  the  printer 
begins  the  tabulation  and  arrangement  for  publication — thereafter 
the  settlement  with  each  of  the  thousands  of  consignees  finishes  the 
shipowner's  work  and  all  that  remains  is  for  each  assured  to  pre- 
sent his  claims  to  his  underwriter  and  after  each  underwriter  goes 
through  the  adjustment,  payment  is  made  and  the  case  is  finished. 

Any  shipowner  or  cargo  owner  who  has  been  obliged  to  furnish 
all  information  required  to  adjust  and  settle  a  large  loss  of  this  na- 
ture, can  testify  as  to  the  enormous  amount  of  time  and  labor  nec- 
essary and  is  sure  to  welcome  any  system  which  will  make  that 
labor  unnecessary. 


Page  seven 


THIRD— EXPENSES 


•) 


ITEMS   OF  EXPENSE,  MERELY  FOR    THE    PURPOSE    OF    DE- 
TERMINING THE  PART  CHARGEABLE  TO  THE  GENERAL 
AVERAGE— THAT  IS,  TO  ALL  INTERESTS 

First— Surveyors  to  determine  which  part  of  the  damage  is  a 
sacrifice  and  which  is  an  accident. 

Second — The  cost  of  average  bonds  for  which  the  adjuster  makes 
a  liberal  charge. 

Third — The  cost  of  circulars  to  cargo  owners,  asking  for  values 
and  for  statement  of  damages  to  their  cargo. 

Fourth — The  cost  of  telegrams  to  expedite  the  adjustment  includ- 
ing those  to  owners  of  various  lots  of  cargo,  on  the  subject  of  sign- 
ing bonds,  making  deposits,  giving  guarantees,  furnishing  values, 
furnishing  claims  for  damages  done  which  should  be  paid  through 
general  average,  and  a  very  considerable  amount  of  postage  in  com- 
munications backward  and  forward  between  consignees  and  adjust- 
ers, the  number  of  which  run  into  the  thousands  on  a  modern  ship. 
(The  shipowner's  and  adjusters'  expenses  of  this  kind  are  repaid  in 
general  average  but  the  cargo  owners  usually  do  not  get  theirs  back) . 

Fifth — Cost  of  advancing  funds.  The  shipowner  makes  a  charge, 
to  which  he  is  entitled  by  law  of  general  average,  of  2%  per  cent 
when  he  has  his  freight  money  in  hand  from  which  to  make  ad- 
vances, and  5  per  cent  on  the  money  advanced  w^hen  he  has  no 
freight  money  in  hand  from  which  to  make  the  advances. 

Sixth — Interest,  which  the  shipowner  gets,  at  the  local  rate  in  the 
state  in  which  the  adjustment  is  settled  (usually  6  to  7  per  cent)  on 
all  the  funds  which  he  has  so  advanced.  Likewise  every  cargo  owner 
who  is  entitled  to  an  allowance  in  general  average  gets  the  local  rate 
of  interest  on  all  the  allowance,  from  the  time  the  cargo  is  delivered 
or  would  have  been  delivered  until  the  adjustment  is  closed  and  the 
balance  paid  to  him. 

If  a  cargo  owner  has  made  a  deposit  to  cover  his  anticipated  con- 
tribution but  has  no  allowance  coming  to  him,  his  money  is  put  in 
the  bank  and  he  is  generally  allowed  about  2  per  cent  for  the  use  of 
his  money  during  the  time  he  is  waiting  to  know  the  exact  amount 
that  he  will  have  to  pay.  In  other  words,  when  his  exact  contribu- 
tion is  known,  he  pays  that  contribution,  which  includes  the  cost 
to  him  of  the  legal  rate  of  interest  (usually  6  or  7  per  cent)  which 

Page  eight 


every  one  collects  who  is  entitled  to  receive  a  balance,  but  on  the 
deposit  which  he  has  made,  covering  the  same  time,  he  only  receives 
about  2  per  cent. 

Seventh — The  surveyors',  adjusters'  and  their  employes'  traveling 
expenses  while  pursuing  the  work  in  connection  with  general 
average. 

Eighth — The  adjusters'  fee,  the  most  formidable  expense  in  con- 
nection with  an  adjustment. 

Ninth — The  cost  of  printing  the  adjustment  itself,  usually  being 
gotten  up  in  book  form.  On  the  west  coast  of  the  United  States  the 
cost  is  about  70  cents  per  page. 

Tenth — The  shipowner's  commission  for  collecting  general  aver- 
age which,  in  San  Francisco,  is  5  per  cent  on  the  first  $10,000,  2^ 
per  cent  on  the  next  $20,000  and  1  per  cent  on  the  excess. 

Many  cases  could  be  cited,  but  it  is  enough  to  say  that  the  cost 
of  adjusting  generally  will  run  from  15  to  25  per  cent  of  the  amount 
of  the  original  loss. 

The  work  done  by  owners  of  cargo,  partly  on  account  of  inex- 
perience in  connection  with  general  average  allowances  in  cargo 
and  securing  rildwoiaonnof  the  same,  all  taken  together  is  nearly  as 
great  as  that  of  the  adjuster,  but  they  get  no  compensation — if  the 
system  is  not  abolished,  perhaps  in  time  they  will  get  an  allowance. 

By  abolishing  the  system  this  expense  will  be  saved  and  in  its 
place  we  may  substitute  a  system  which  will  make  it  unnecessary  to 
study  the  subject. 


Page  nine 


I  propose  that  all  bills  of  lading  be  endorsed  to  the  effect  that 
there  shall  be  no  claims  by  either  party,  for  general  average;  that 
they  each  agree  by  the  contract  between  the  shipowner  and  the 
cargo  owner,  that  there  shall  be  no  general  average,  and  that  all 
other  references  in  the  bills  of  lading  regarding  general  average  shall 
be  eliminated  or  be  null  and  void;  and  as  a  start  in  this  direction 
the  following  endorsement  is  suggested  as  one  which  would  probably 
cover  most  cases : 

"ENDORSEMENT  TO  THE  BILL  OF  LADING 

"Notwithstanding  the  terms  and  conditions  of  this  bill  of  lading, 
it  is  hereby  agreed  between  contracting  parties  (the  shipowner 
on  the  one  hand  and  the  cargo  owner  on  the  other)  that  the  owners 
of  each  and  every  interest  hereby  waive  all  claim  for  allowance  or 
contribution  or  expenses  of  any  nature  whatsoever  by  or  through 
general  average  or  based  upon  the  principles  of  general  average  or 
any  adjustment  of  such  nature;  the  essence  and  chief  object  of  this 
agreement  being  to  abolish  the  necessity  and  operation  of  general 
average  or  the  principles  thereof,  and  to  substitute  therefor,  through 
the  arranging  of  an  all-interest  marine  insurance  policy  covering  the 
entire  venture,  a  simple  and  expeditious  ascertainment  of  the  amount 
of  loss  or  damage  to  any  interest  insured,  and  the  prompt  payment 
by  the  assurers,  each  his  own  proportion,  as  signed  on  the  policy, 
regardless  of  the  interest  to  which  the  loss  or  damage  has  happened. 

"A  part  of  the  consideration  for  this  agreement  is  that  the  owner 
and/or  agent  of  the  ship  is  hereby  made  the  agent  of  the  owner  of 
the  cargo  for  the  express  purpose  of  placing  marine  insurance  on  the 
cargo  to  be  shipped  under  this  bill  of  lading  to  which  this  endorse- 
ment is  attached,  the  said  insurance  to  be  in  terms  and  on  condi- 
tions as  may  be  agreed  by  the  shipowner  or  his  agent,  the  same  being 
placed  for  account  of  the  owner  of  the  cargo,  the  cost  of  which  in- 
surance is  included  in  the  freight  charge  under  this  bill  of  lading. 

"It  is  further  agreed  that  should  any  salvage  services  or  any  spe- 
cial services  chargeable  direct  to  this  cargo,  be  rendered  for  account 
of  cargo  hereunder,  that  the  shipowner  is  also  hereby  appointed  the 
agent  for  the  express  purpose  of  agreeing  to  the  value  of  said  serv- 
ices and  settling  the  same  subject  only  to  the  direction  of  the  under- 
writers covering  this  cargo,  it  being  understood  that  claim  for  such 
salvage  services,  if  any,  shall  be  presented  directly  to  the  under- 
writers for  their  approval  and  settlement. 

"Should  the  owner  of  cargo  have  placed  any  insurance  separately. 

Page  ten 


that  is,  independent  of  the  above  insurance,  then  the  shipowner  shall 
be  entitled  to  the  benefit  of  any  such  insilrance  on  the  goods  and  to 
any  payments  made  by  or  on  behalf  of  the  insurers  theerof,  whether 
in  the  guise  of  advances,  loans  or  otherwise. 

"The  value  of  cargo  must  be  declared  at  time  of  shipment,  and 
same  becomes  the  basis  for  any  settlement  in  case  of  loss." 


Pugc  eleven 


THE  PLAN 


The  plan  for  equalizing  the  loss  is  as  follows:  The  shipowner 
is  to  place  the  order  for  insurance  on  his  vessel,  freights,  disburse- 
ments and  for  every  other  interest  of  his  own,  in  connection  with 
the  vessel  or  the  freights,  and  also  on  the  cargo,  advances  thereon, 
duties,  profits,  commissions  or  any  other  interest  in  connection 
with  the  cargo,  all  under  a  single  policy,  or  series  of  policies;  all 
being  in  the  same  general  terms.  Each  underwriter  must  accept  a 
specified  percentage  of  each  interest,  hull,  freight,  disbursements, 
advances,  cargoes,  treasure,  duties,  commissions,  profits,  advances 
on  cargo  and  every  other  interest  on  board  the  vessel,  that  is  subject 
to  general  average,  or  could  possibly  claim  a  general  average  con- 
tribution, every  interest  on  board  must  be  insured.  For  instance, 
an  underwriter  has  a  capacity  to  carry  $20,000  on  a  risk. 

Example : 

Hull,  equipment,  etc.,  valued  at $  500,000.00 

Freight  money,  etc.,  valued  at  (open  policy) 100,000.00 

Disbursements,  etc.,  valued  at  (open  policy  or  valued) .  50,000.00 

Treasure  (not  in  the  mails)  valued  at  (open  policy) .  .  500,000.00 

Cargo,  valued  at  (open  policy) 700,000.00 

Advances  on  cargo,  etc.,  valued  at  (open  policy) 50,000.00 

Duties,  valued  at  (open  policy) 100,000.00 

$2,000,000.00 

In  such  a  case,  the  underwriter  who  can  carry  §20,000  subscribes 
1  per  cent  on  each  particular  interest.  The  policy  on  the  hull  and  dis- 
bursements will  naturally  be  an  annual  policy.  The  policy  on  freight, 
cargo  and  other  like  interests,  will  be  open  and  subject  to  declara- 
tion at  the  moment  the  voyage  begins,  and  the  premium  will  be 
fixed  according  to  cargo,  voyage,  etc.  If  cargo  is  taken  on  at 
an  intermediate  port,  the  policy  will  provide  the  premium  that 
is  to  be  charged  from  intermediate  port  to  whatever  other  port  the 
insurance  will  run,  and  the  underwriter's  interest  will  likewise  be 
1  per  cent  of  the  new  freights,  cargoes,  etc.  And  as  each  piece  of 
cargo  is  discharged  the  underwriter's  interest  is  reduced  propor- 
tionately, and  as  each  new  piece  of  cargo  is  taken  on  board  each 
underwriter's  interest  attaches  in  proportion;  the  arrangement  be- 
ing that  this  underwriter's  interest  always  is  1  per  cent  of  the  value 
of  the  hull,  1  per  cent  of  the  freight,  1  per  cent  of  the  cargo,  1  per 
cent  of  the  advances,  disbursements,  duties,  treasure,  etc.;  it  there- 

Page  twelve 


fore  matters  not  to  him  what  part  of  the  interest  shall  have  been 
sacrificed  in  order  to  save  the  remainder.  No  sort  of  an  accounting 
is  necessary,  except  to  ascertain  the  gross  amount  of  the  loss  suf' 
fered  by  all  of  the  different  interests  together  and  make  a  debit  note 
for  1  per  cent  of  the  total  of  that  loss,  which  is  to  be  promptly  paid  ) 
by  the  underwriter  without  the  necessity  of  any  other  adjustment 
It  is  immaterial  to  him  whether  a  loss  shall  have  occurred  by  fire, 
or  by  water  to  extinguish  the  fire.  It  is  immaterial  to  him  whether 
the  ship's  injuries  shall  have  occurred  by  the  stranding  or  by  the 
subsequent  efforts  to  get  the  ship  off  the  shore.  It  will  be  imma- 
terial to  him  as  to  whether  a  certain  item  of  expense  has  been  in- 
curred to  avoid  a  possible  loss  to  all  interests  or  to  any  one  interest, 
or  whether  it  was  incurred  to  repair  a  loss  by  pure  accident.  The 
shipowner  goes  to  various  underwriters,  until  he  has  100  per  cent  of 
the  maximum  risk  on  all  interests  fully  subscribed  and  then  the  ar- 
rangement begins. 

A  form  of  policy  is  herewith  submitted.    It  is  subject  to  modii- 
cation  as  occasion  may  arise. 


Page  thirteen 


AUL  INTEREST  POLICY 


SECTION  1. — In  respect. to  the  vessel,  etc. 

For  account  of 

Loss,  if  any,  payable  to or  order 

Do  Make  Insurance  and  Cause 

To  be  insured,  Lost  or  not  Lost,  to  the  amount  of Dollars 

At  and  from  the... Day  of 19 

Until  the Day  of 19 

Standard  Time, 

and  at  pro  rata  premium,  until  the  completion  of  the  voyage,  if  the 
vessel  be  on  one  with  cargo  at  the  last  date,  and  until  discharge  of 
the  last  item  of  cargo  therefrom. 

Upon  the  body,  tackle,  apparel,  stores,  ordnance,  munitions,  ar- 
tillery, boats,  and  other  furniture,  boilers  and  machinery  of    the 

Steamship  called  the 

S.  S.  or  by  whatsoever  name  or  names  the  said  Vessel  is  or  shall  be 
named  or  called;  beginning  the  adventure  upon  the  said  Vessel,  etc., 
as  above,  and  so  shall  continue  and  endure  during  the  period  afore- 
said, as  employment  may  offer,  in  port  and  at  sea,  in  docks  and 
graving  docks,  and  on  ways,  gridirons  and  pontoons,  at  all  times, 
in  all  places,  and  on  all  occasions,  services  and  trades  whatsoever 
and  wheresoever,  under  steam  or  sail;  with  leave  to  sail  with  or 
without  pilots,  to  tow  and  be  towed,  and  to  assist  vessels  and/or 
craft  in  all  situations  and  to  any  extent,  and  to  go  on  trial  trips. 
With  liberty  to  discharge,  exchange  and  take  on  board  goods,  specie, 
passengers  and  stores,  wherever  the  Vessel  may  call  at  or  proceed 
to,  and  with  liberty  to  carry  goods,  live  cattle,  etc.,  on  deck  or  other- 
wise, but  warranted  free  of  any  claim  in  respect  of  deck  cargo.  In- 
cluding all  risks  of  docking,  undocking,  changing  docks,  or  moving 
in  harbor  and  going  on  or  off  gridiron  or  graving  docks  as  often  as 
may  be  done  during  the  currency  of  this  Policy. 

The  said  Ship,  etc.,  for  so  much  as  concerns  the  Assured,  by 
agreement  between  the  Assured  and  Assurers  in  this  Policy,  are  and 
shall  be  valued  at  as  follows : — 

Hull,  tackle,  apparel,  furniture,  etc.      $ 

Boilers,  machinery,  etc.,  and  every- 
thing connected  therewith.  $ 

$ 

Donkey  boilers,  winches,  cranes,  windlasses,  steering  gear,  and 
electric  light  apparatus,  shall  be  deemed  to  be  part  of  the  hull,  and 
not  part  of  the  machinery.  Refrigerating  machinery  and  insulation 
appertaining  thereto  not  covered  unless  expressly  included  in  this 
Policy,  or  unless  the  property  of  the  owners  of  the  Vessel. 

Touching  the  Adventures  and  Perils  which  we,  the  said  Assurers, 
are  contented  to  bear  and  take  upon  us,  they  are  of  the  Seas,  Men- 
of-War,  Fire,  Enemies,  Pirates,  Rovers,  Thieves,  Jettisons,  Letters 
of  Mart  and  Counter-Mart,  Surprisals,  Taking  at  Sea,  Arrests,  Re- 

Page  fourteen 


straints  and  Detainments  of  all  Kings,  Princes,  and  Peoples,  of  what 
Nation,  Condition  or  Quality  soever,  Barratry  of  the  Master  and  Ma- 
riners, Explosions,  Riots,  or  other  causes  of  whatsoever  nature  aris- 
ing either  on  shore  or  otherwise,  causing  Loss  of  or  Injury  to  the 
Property  hereby  insured,  and  of  all  other  Perils,  Losses,  and  Mis- 
fortunes that  have  or  shall  come  to  the  Hurt,  Detriment,  or  Damage 
of  the  said  Ship,  etc.,  or  any  part  thereof.  And  in  case  of  any  Loss 
or  Misfortune,  it  shall  be  lawful  for  the  Assured,  their  Factors, 
Servants,  and  Assigns,  to  sue,  labor,  and  travel  for,  in,  and  about  the 
Defense,  Safeguard,  and  Recovery  of  the  said  Ship,  etc.,  or  any  part 
thereof,  without  prejudice  to  this  Insurance  to  the  Charges  whereof 
the  Assurers  will  contribute  according  to  the  Rate  and  Quantity  of 
the  sum  herein  assured.  And  it  is  expressly  declared  and  agreed 
that  no  act  of  the  Insurer  or  Insured  in  recovering,  saving  or  pre- 
serving the  property  insured  shall  be  considered  as  a  waiver  or  ac- 
ceptance of  abandonment. 

This  Insurance  also  specially  to  cover  (subject  to  the  free  of 
average  warranty)  loss  of,  or  damage  to  hull  or  machinery,  through 
the  negligence  of  Master,  Charterers,  Mariners,  Engineers,  or  Pilots, 
or  through  explosions,  bursting  of  boilers,  breakage  of  shafts,  or 
through  any  latent  defect  in  the  machinery  or  hull,  provided  such 
loss  or  damage  has  not  resulted  from  want  of  due  diligence  by  the 
Owners  of  the  Ship,  or  any  of  them,  or  by  the  Manager,  Masters, 
Mates,  Engineers,  Pilots,  or  Crew  not  to  be  considered  as  part  own- 
ers within  the  meaning  of  this  clause  should  they  hold  shares  in  the 
steamer. 

And  it  is  further  agreed,  that  if  the  Ship  hereby  insured  shall 
come  into  collision  with  any  other  Ship  or  Vessel,  and  the  Assured 
or  Charterers  shall  in  consequence  thereof  become  liable  to  pay  and 
shall  paj'  by  way  of  damages  to  any  other  person  or  persons  any 
sum  or  sums  not  exceeding  in  respect  of  any  one  such  collision  the 
value  of  the  Ship  hereby  Insured,  we,  the  Assurers,  will  pay  the 
Assured  or  Charterers  such  proportion  of  such  sum  or  sums  so  paid 
as  our  subscriptions  hereto  bear  to  the  value  of  the  Ship  hereby 
Insured.  And  in  cases  where  the  liability  of  the  Ship  has  been  con- 
tested with  the  consent  in  writing  of  a  majority  of  the  Underwriters 
on  the  hull  and/or  machinery  (in  amount)  we  will  also  pay  a  like 
proportion  of  the  costs  thereby  incurred  or  paid;  but  when  both 
Vessels  are  to  blame,  then,  unless  the  liability  of  the  Owners  or 
Charterers  of  one  or  both  of  such  Vessels  becomes  limited  by  law, 
claims  under  the  Collision  Clause  shall  be  settled  on  the  principle  of 
Cross-Liabilities  as  if  the  Owners  or  Charterers  of  each  Vessel  had 
been  compelled  to  pay  to  the  Owners  or  Charterers  of  the  other  of 
such  Vessels  such  one-half  or  other  proportion  of  the  latter's  dam- 
ages as  may  have  been  properly  allowed  in  ascertaining  the  balance 
or  sum  payable  by  or  to  the  Assured  or  Charterers  in  consequence 
of  such  collision;  and  it  is  further  agreed  that  the  principles  in- 
volved in  this  clause  shall  apply  to  the  case  where  both  Vessels  are 
the  property,  in  part  or  in  whole,  of  the  same  Owners  or  Charterers, 
all  questions  of  responsibility  and  amount  of  liability  as  between 
the  two  Ships  being  left  to  the  decision  of  a  single  Arbitrator,  if 

Page  fifteen 


the  parties  can  agree  upon  a  single  Arbitrator,  or  failing  such  agree- 
ment, to  the  decision  of  Arbitrators,  one  to  be  appointed  by  the 
Managing  Owners  or  Charterers  of  both  Vessels,  and  one  to  be 
appointed  by  the  majority  (in  amount)  of  Underwriters  interested 
:n  each  Vessel;  the  two  Arbitrators  chosen  to  choose  a  third  Arbi- 
trator before  entering  upon  the  reference,  and  the  decision  of  such 
single,  or  of  any  two  of  such  three  Arbitrators,  appointed  as  above 
to  be  final  and  binding.  Provided  always  that  this  clause  shall  in  no 
case  extend  to  any  sum  which  the  Assured  or  Charterers  may  become 
liable  to  pay,  or  shall  pay  for  removal  of  obstructions  under  stat- 
utory powers,  for  injury  to  harbors,  wharves,  piers,  stages,  and  sim- 
ilar structures,  consequent  on  such  collisions,  or  in  respect  of  the 
cargo  or  engagements  of  the  Insured  Vessel,  or  for  loss  of  life,  or 
personal  injury.  And  provided  also  that  in  the  event  of  any  claim 
being  made  by  Charterers  under  this  clause  they  shall  not  be  entitled 
to  recover  in  respect  of  any  liability  to  which  the  Owners  of  the 
Ship,  if  interested  in  this  Policy  at  the  time  of  the  collision  in  ques- 
tion, would  not  be  subject,  nor  to  a  greater  extent  than  the  Ship- 
owners would  be  entitled  in  such  event  to  recover. 

And  it  is  further  agreed  that  in  the  event  of  salvage,  towage,  or 
other  assistance  being  rendered  to  the  Vessel  hereby  insured  by  any 
Vessel  belonging  in  part  or  in  whole  to  the  same  Owners  or  Charter- 
ers, the  value  of  such  services  (without  regard  to  the  common 
ownership  of  the  Vessels)  shall  be  ascertained  by  arbitration  in  the 
manner  above  provided  for  under  the  Collision  Clause,  and  the 
amount  so  awarded  so  far  as  applicable  to  the  interest  hereby 
insured  shall  constitute  a  charge  under  this  Policy. 

Salvage  charges  payable  in  such  proportion  as  this  insurance 
bears  to  the  value  herein. 

Average  payable  on  each  valuation  separately  or  on  the  whole, 
without  deduction  of  thirds,  new  for  old. 

In  no  case  shall  Underwriters  be  liable  for  unrepaired  damage 
in  addition  to  a  subsequent  total  loss  sustained  during  the  term 
covered  by  this  Policy. 

In  ascertaining  whether  the  Vessel  is  a  constructive  total  loss 
the  insured  value  shall  be  taken  as  the  repaired  value,  and  nothing 
in  respect  of  the  damaged  or  break-up  value  of  the  vessel  or  wreck 
shall  be  taken  into  account. 

Notwithstanding  anything  herein  contained  to  the  contrary  this 
Policy  is  warranted  free  from  particular  average  under  3  per  cent, 

or  unless  amounting  to ,  but  nevertheless  when  the  Vessel 

shall  have  been  stranded,  sunk,  on  fire,  or  in  collision  with  any 
other  Ship  or  Vessel,  Underwriters  shall  paj^  the  damage  occasioned 
thereby,  and  the  expense  of  sighting  the  bottom  after  stranding  shall 
be  paid,  if  reasonably  incurred,  even  if  no  damage  be  found. 

The  warranty  and  conditions  as  to  average  under  3  per  cent  to 
be  applicable  to  each  voyage  as  if  separately  insured,  and  a  voyage 
shall  be  deemed  to  commence  at  one  of  the  following  periods  to 
be  selected  by  the  Assured  when  making  up  the  claim,  viz.:  at  any 
time  at  which  the  Vessel  (1)  begins  to  load  cargo  or  (2)  sails  in 
ballast  to  a  loading  port.    Such  voyage  shall  be  deemed  to  continue 

Page  sixteen 


during  the  ensuing  period  until  either  she  has  made  one  outward 
and  one  homeward  passage  (including  an  intermediate  ballast 
passage,  if  made)  or  has  carried  and  discharged  two  cargoes,  which- 
ever may  first  happen,  and  further,  in  either  case,  until  she  begins 
to  load  a  subsequent  cargo  or  sails  in  ballast  for  a  loading  port. 
When  the  Vessel  sails  in  ballast  to  effect  damage  repair  such  sailing 
shall  not  be  deemed  lo  be  a  sailing  for  a  loading  port  although  she 
loads  at  the  repairing  port.  In  calculating  the  3  per  cent  above 
referred  to,  particular  average  occurring  outside  the  period  covered 
by  this  Policy  may  be  added  to  particular  average  occurring  within 
such  period  provided  it  occur  upon  the  same  voyage  (as  above  de- 
fined), but  only  that  portion  of  the  claim  arising  within  such  period 
shall  be  recoverable  hereon.  The  commencement  of  a  voyage  shall 
not  be  so  fixed  as  to  overlap  another  voyage  on  which  a  claim  is 
made  on  this  or  the  preceding  Policy. 

Should  the  vessel  at  the  expiration  of  this  policy  have  com- 
menced a  voyage  with  cargo  on  board  or  be  in  distress  or  at  a  port 
of  refuge  or  of  call,  she  shall  be  held  covered  at  a  pro  rata  daily 
premium  to  her  port  of  destination  and  until  discharge  of  the  last 
item  of  cargo  therefrom. 

Should  the  Vessel  be  sold  or  transferred  to  other  ownership, 
then,  unless  the  Underwriters  agree  in  writing  to  such  sale  or  trans- 
fer, this  Policy  shall  thereupon  become  cancelled  from  date  of  sale 
or  transfer,  unless  the  Vessel  has  cargo  on  board  or  is  at  sea  in  bal- 
last, in  either  of  which  cases  such  cancellation  shall  be  suspended 
until  final  discharge  if  with  cargo,  or  at  port  of  destination  if  in 
ballast.    A  pro  rata  daily  return  of  premium  shall  be  made. 

Warranted  nevertheless  free  of  capture,  seizure,  and  detention, 
and  the  consequences  thereof,  or  any  attempt  thereat,  piracy 
excepted,  and  also  from  all  consequences  of  hostilities,  or  warlike 
operations,  whether  before  or  after  declaration  of  war. 

r per  cent  for  each  uncommenced  month  ^ 

if   it   be   mutually   agreed   to   cancel   this 
To  return  <  Policy.  ^  and  arrival 

j  per  cent  for  each  consecutive 

L  days  the  vessel  may  be  laid  up  in  port : 

A  period  in  port  falling  between  two  insurances  to  be  allowed 
pro  rata  on  each,  underwriters  on  each  insurance  agreeing  to  pay 
their  pro  rata  proportion  of  the  Return  due. 

In  the  event  of  accident  whereby  loss  or  damage  may  result  in 
ft  claim  under  this  Policy,  notice  shall  be  given  to  the  Underwriters, 
prior  lo  survey,  so  that  they  may  appoint  their  own  surveyor  if 
they  do  so  desire;  and  wrhenever  the  extent  of  the  damage  is  ascer- 
tainable the  majority  (in  amount)  of  the  Underwriters  may  take  or 
may  require  the  Assured  to  take  tenders  for  the  repair  of  such 
damage.  In  cases  where  a  tender  is  accepted  by  or  with  the  ap- 
proval of  Underwriters,  the  Underwriters  will  make  an  allowance 
at  the  rate  of  30  per  cent  per  annum  on  the  insured  value  for  the 
lime  actually  lost  in  waiting  for  tenders.  In  the  event  of  the  Assured 
failing  to  comply  with  the  conditions  of  this  clause  15  per  cent  shall 
be  deducted  from  the  amount  of  the  ascertained  claim. 

Page  seventeen 


Held  covered  in  case  of  any  breach  of  warranty  as  to  cargo, 
trade,  locality  or  date  of  sailing,  provided  notice  be  given  and  any 
additional  premium  required  be  agreed  immediately  after  receipt 
of  advices  of  breach  or  proposed  breach  by  Owners. 

It  is  agreed  that  no  interest  in  or  about  the  vessel  or  her  equip- 
ment, freights,  profits,  disbursements,  passage  money,  or  any  other 
thing  in  connection  therewith  shall  be  insured  except  with  these 
Assurers  and  in  the  same  identical  proportion. 

SECTION  2. — In  respect  to  the  cargo,  advances,  freights,  etc. 

WHEUEAS,  It  has  been  proposed  to  the 

by 

as  well  in  his  or  their  own  name  as  for  and  in  the  name  and  names 
of  all  and  every  other  person  or  persons  to  whom  the  subject  matter 
of  this  Policy  does,  may  or  shall  appertain  in  part  or  in  all,  to  make 
with  the  said  company  the  insurance  hereinafter  mentioned  and 
described. 

NOW  THIS  POLICY  WITNESSETH,  That  in  consideration  of  the 
said  person  or  persons  effecting  this  Policy,  promising  to  pay  to 
the  said  Company  a  Premium  on  each  and  every  item  of  cargo  to 
be  transported  and  the  advances  and/or  freights  thereon,  at  and 
after  the  rate  agreed  for  such  insurance,  the  said  Company  take 
upon  themselves  the  burden  of  such  insurance  to  the  amount  of 
such  values  as  may  be  agreed  herein  and  declared  before  attach- 
ment of  risks  and  promise  and  agree  with  the  Insured,  their  Exec- 
utors, Administrators  and  Assigns  in  all  respects  truly  to  perform 
and  fuljQU  the  Contract  contained  in  this  policy,  AND  it  is  hereby 
agreed  and  declared  that  the  said  Insurance  shall  be  and  is  an  In- 
surance (lost  or  not  lost)  at  and  from  the  time  of  delivery  into  the 
custody  of  the  carrier  at  the  usual  places  of  acceptance  and  until 
redelivered  by  the  carrier  to  consignee  or  his  agent  at  the  usual 
places  of  delivery,  AND  it  is  also  agreed  and  declared  that  the  sub- 
ject matter  of  this  Policy  as  between  the  Insured  and  the  said  Com- 
pany so  far  as  concerns  this  Policy  shall  be  and  is  as  follows  upon 
each  and  all  such  cargoes,  advances  and  freights  under  and/or  on 

deck  as  customary,  laden  in  the  Ship  or  Vessel  called 

whereof is  at  present  Master  or  whoever 

shall  go  for  Master  in  the  said  Ship  or  Vessel. 

AND  these  Assurers  promise  and  agree  that  the  Insurance  afore- 
said shall  commence  upon  the  said  Freight  Goods,  Merchandise,  etc., 
from  the  time  when  the  Goods  or  Merchandise  shall  be  laden  on 
board  the  said  Ship  or  Vessel,  Craft  or  Boat,  as  above,  and  until 
the  said  Goods  and  Merchandise  be  discharged  and  safely  landed  at, 
as  above  AND  that  it  shall  be  lawful  for  the  said  Ship  or  Vessel  in 
the  Voyage  so  insured  as  aforesaid  to  proceed  and  sail  to  and  touch 
and  stay  at  any  Ports  or  Places  whatsoever  w^ithout  prejudice  to 
this  insurance,  AND  touching  the  Adventures  and  Perils  which  these 
Assurers  are  contented  to  bear,  and  do  take  upon  themselves  in  the 
Voyage  so  insured  as  aforesaid,  they  are  of  the  seas,  Men-of-War, 
Fire,  Enemies,  Pirates,  Rovers,  Thieves,  Jettisons,  Letters  of  Mart 

Page  eighteen 


and  Counter-Mart,  Surprisals,  Takings  at  Sea,  Arrests,  Restraints 
and  Detainments  of  all  Kings,  Princes  and  People  of  what  Nation, 
Condition  or  Quality  soever.  Barratry  of  the  Master  and  Mariners 
and  of  all  other  Perils,  Losses  and  Misfortunes  that  have  or  shall 
come  to  the  Hurt,  Detriment  or  Damage  of  the  aforesaid  subject 
matter  of  this  insurance,  or  any  part  thereof,  AND  in  case  of  any 
Loss  or  Misfortune,  it  shall  be  lawful  to  the  Insured,  their  Factors, 
Servants  and  Assigns,  to  sue,  labor  and  travel  for,  in  and  about  the 
Defense,  Safeguard  and  Recovery  of  the  aforesaid  subject  matter 
of  this  insurance,  or  any  part  thereof,  without  prejudice  to  this  In- 
surance, the  charges  whereof  these  Assurers  will  bear  in  proportion 
to  the  sum  hereby  insured;  AND  it  is  expressly  declared  and  agreed 
that  the  acts  of  Insurer  or  Insured  in  Recovering,  Saving  or  Preserv- 
ing the  Property  insured  shall  not  be  considered  a  waiver  or  accept- 
ance of  abandonment;  AND  it  is  declared  and  agreed  that  Corn, 
Fish,  Saltpetre,  Fruit,  Flour,  Rice,  Seeds,  Hides,  Skins  and  Molasses 
shall  be  and  are  warranted  free  from  average,  unless  the  Ship  be 
stranded,  sunk  or  burnt  or  unless  caused  by  collision  with  any 
other  Ship  or  Vessel,  and  that  Sugar,  Tobacco,  Hemp  and  Flax  shall 
be  and  are  warranted  free  from  average,  under  Five  Pounds  per 
centum,  and  that  all  other  Goods  and  also  Ship  and  Freight  shall 
be  and  are  warranted  free  from  average  under  Three  Pounds  per 
centum,  unless  the  Ship  be  stranded,  sunk  or  burnt. 

[The  clauses  in  italic  shall  control  other  printed  conditions  in- 
consistent with  the  same.] 

Warranted  free  of  capture,  seizure  and  detention  and  the  conse- 
quences thereof  or  any  attempt  thereat,  piracy  excepted,  and  also 
from  all  consequences  of  hostilities  or  warlike  operations,  whether 
before  or  after  declaration  of  war. 

Warranted  free  of  loss  or  damage  caused  by  strikers,  locked  out 
workmen  or  persons  taking  part  in  labor  disturbances  or  riots  or 
civil  commotions. 

Salvage  charges  payable  in  such  proportion  as  this  insurance 
bears  to  the  valuation  herein. 

Held  covered,  at  a  premium  to  be  arranged,  in  case  of  deviation 
or  change  of  voyage  or  of  any  omission  or  error  in  the  description 
of  interest,  vessel  or  voyage. 

Including  risk  of  craft,  raft  and/or  lighter  to  and  from  the  ves- 
sel. Each  craft,  raft  and/or  lighter  to  be  deemed  a  separate  insur- 
ance. The  assured  are  not  to  be  prejudiced  by  any  agreement 
exempting  lightermen  from  liability. 

Including  all  liberties  as  per  contract  of  affreightment.  The 
assured  are  not  to  be  prejudiced  by  the  presence  of  the  negligence 
clause  and/or  latent  defect  clause  in  the  bills  of  lading  and/or  char- 
ter-party. The  seaworthiness  of  the  vessel  as  between  the  assured 
and  the  assurers  is  hereby  admitted. 

Warranted  free  from  particular  average  as  per  separate  rale 
schedule  herein  unless  the  vessel  or  craft  be  stranded,  sunk  or 
burnt,  but  the  assurers  are  to  pay  the  insured  value  of  any  package 

Page  nineteen 


•r  packages  which  may  be  totally  lost  in  loading,  transshipment 
or  discharge,  also  any  loss  of  or  damage  to  the  interest  insured 
which  may  reasonably  be  attributed  to  fire,  collision  or  contact  of 
the  vessel  and/or  craft  and/or  conveyance  with  any  external  sub- 
stance (ice  included)  other  than  water,  or  to  discharge  of  cargo  at 
port  of  distress,  also  to  pay  landing,  warehousing,  forwarding  and 
special  charges  if  incurred. 

Grounding  in  the  Panama  Canal,  Suez  Canal,  Manchester  Ship 
Canal  or  its  connections,  in  the  River  Mersey  above  Rock  Ferry  Slip, 
the  Columbia  River  and/or  Willamette  Rivers  and/or  Yukon  Rivers 
or  tributaries  and/or  Yukon  Flats  or  Fraser  River,  not  to  be  deemed 
a  strand,  but  underwriters  to  pay  any  damage  or  loss  which  may  be 
proved  to  have  directly  resulted  therefrom. 

It  is  agreed  that  no  other  interest  in  or  about  the  freights  or 
cargo,  increased  values,  profits,  advances,  duties,  or  any  other  thing 
in  connection  therewith  shall  be  insured  except  with  these  assurers 
and  in  the  same  identical  proportion. 

Rates  of  premium  attaching  to  the  cargo  to  be  paid  to  the  As- 
surers hereof  shall  be  for  the  separate  voyages  as  per  schedule 
hereto  attached.  The  values  of  the  separate  items  of  cargo  shall  be 
subject  to  such  agreement  as  may  be  made  between  the  carrier  and 
the  owner  or  shipper  of  each  item  of  cargo,  but  in  no  case  is  to  be 
less  than  the  invoice  value  nor  in  any  case  without  first  having  the 
consent  of  the  Assurers  hereof,  more  than  invoice  plus  25  per  cent. 
Such  values  shall  be  agreed  upon  before  the  commencement  of  the 
risks. 

The  risks  shall  commence  as  soon  as  the  carrier  has  received 
into  his  custody  at  the  usual  dock,  warehouse,  quay,  landing  place 
or  on  lighters  as  is  usual  and  customary  in  his  business,  and  shall 
continue  until  the  carrier  has  delivered  each  item  of  cargo  to  its 
consignee  or  his  agent  in  the  usual  place  of  such  delivery.  The  in- 
tent of  this  insurance  being  to  protect  such  cargo  during  all  the  times 
that  it  is  in  the  custody  of  the  carrier,  whether  in  warehouse,  on 
dock,  quay,  landing  place,  lighter  or  the  vessel.  The  character  of 
risk  assumed  on  each  particular  item  of  cargo  is  as  may  be  agreed 
between  the  carrier  and  the  owner  or  shipper,  subject  to  the  schedule 
herein  under  which  such  explanations  of  risks  may  be  made,  at- 
tached hereto. 

It  is  the  essence  of  this  insurance  that  every  item  of  cargo 
shipped  on  board  the  vessel  shall  pay  a  premium  according  to  this 
agreement  to  these  Assurers.  Should  there  be  any  other  insurance 
placed  by  the  owner  or  shipper  of  the  goods,  such  policies  or  claim 
thereunder  as  may  accrue  in  the  event  of  a  loss  claimable  from  such 
other  underwriters,  shall  be  promptly  handed  to  or  assigned  to  the 
carrier  for  account  of  its  Assurers. 

SECTION  3. 

In  addition  to  the  interest  in  the  foregoing  sections  one  and  two, 
for  which  provision  is  made,  this  policy  is  also  to  cover  all  addi- 

Page  twenty 


tional  interests  such  as  profits,  disbursements,  passage  money  and 
all  other  interests  at  the  risk  of  the  vessel  and/or  her  owners,  under 
either  a  time  or  voyage  risk,  as  may  be  agreed  at  the  inception  of 
this  policy  at  rates  and  on  conditions  as  per  specifications  herein. 
AND  also  shall  cover  all  additional  interests  such  as  increased 
values,  profits,  advances,  duties  and  all  other  interests  at  the  risk 
of  the  cargo  and/or  owners  thereof  as  may  be  agreed  at  the  incep- 
tion of  this  policy  at  rates  and  on  conditions  as  per  specifications 
herein. 

It  is  agreed  that  the  contract  of  affreightment  issued  to  owners 
or  shippers  of  cargo  shall  contain  the  essentials  of  this  agreement. 
It  is  further  agreed  that  in  case  of  any  loss  or  damage  to  the  ship, 
cargo,  advances  and/or  freight  covered  hereunder,  that  the  ship- 
owner or  carrier  will  give  immediate  notice  to  these  Assurers,  where- 
upon if  the  damage  be  to  the  ship,  a  surveyor  will  at  once  be  ap- 
pointed by  the  Assurers  to  ascertain  the  damage  and  recommend 
the  repairs,  and  such  repairs  shall  be  made  entirely  under  the  su- 
pervision of  such  surveyor.  If  the  damage  be  to  the  cargo,  prompt 
notice  shall  be  given  to  these  Assurers,  whereupon  they  will  appoint 
a  surveyor  or  appraiser,  whose  duty  it  will  be  to  ascertain  and 
agree  with  owners,  shippers  or  consignees  as  to  the  amount  of  dam- 
age, or  to  repair  the  damage,  or  failing  in  this,  to  make  such  prompt 
disposition  of  the  damaged  goods  as  will  be  for  the  best  interests  of 
all  concerned. 

The  owners  of  each  and  every  interest  hereby  insured  waive  all 
claim  for  allowance  or  contribution  of  any  nature  whatsoever  by  or 
through  general  average  or  based  upon  the  principles  of  general 
average  or  any  adjustment  of  such  nature,  the  essence  and  chief  ob- 
ject of  this  joint  policy  being  to  abolish  the  necessity  and  operation 
of  general  average  or  the  principles  thereof  and  to  substitute  there- 
for the  simple  and  expeditious  ascertainment  of  the  amount  of  loss 
or  damage  to  either  interest  insured  and  the  prompt  payment  by  the 
Assurers,  each  his  own  proportion,  as  signed  hereon,  regardless  of 
the  interest  to  which  the  loss  or  damage  has  happened. 

It  is  agreed  that  the  following  clause  is  to  be  inserted  on  each  B/L: 

"Should  the  owner  of  cargo  have  placed  any  insurance  separate, 
that  is,  independent  of  the  above  insurance,  then  the  shipowner 
shall  be  entitled  to  the  benefit  of  any  such  insurance  on  the  goods 
and  to  any  payments  made  by  or  on  behalf  of  the  Insurers  thereof, 
whether  in  the  guise  of  advances,  loans  or  otherwise."  And  that 
such  clause  in  the  B/L  for  the  benefit  of  the  shipowner  shall  revert 
to  the  benefit  of  these  Insurers  and  that  such  collections  made  from 
such  other  underwriters  by  the  shipowner  shall  be  promptly  paid 
over  to  the  Assurers  hereeon. 

Loss,  if  any,  payable  in 

In  witness  whereof  the  undersigned  assurers  have  hereunto  set 
their  hands  in this — day  of 


Page  twenty-one 


It  is  to  be  expected  that  difficulties  will  be  met  in  the  substitu- 
tion of  a  new  system  for  one  so  long  in  vogue.  A  few  have  occurred 
to  me  and  I  mention  them  in  order: 

FIliST:  Marine  underwriters  are  often  in  the  habit  of  insuring 
the  hull  of  a  vessel  based  on  a  value  much  less  than  her  actual  value. 
The  reason  for  this  is  that  the  shipowner  seeks  to  get  his  ship  fully 
*)  insured  so  far  as  partial  losses  are  concerned,  without  paying  a 
'  premium  on  the  full  valuation  of  his  vessel.  The  form  of  policy  put 
forward  will  prevent  the  shipowner  from  insuring  against  all  risks 
with  one  underwriter  and  insuring  with  another  underwriter  with- 
out the  knowledge  of  the  first,  a  further  value  on  disbursements, 
profits,  commissions,  earnings,  etc.,  as  is  now  being  done.  Such  a 
move  will  appeal  to  underwriters  as  being  good  business.  It  cer- 
tainly will  appeal  to  the  well-meaning  shipowner  as  being  thoroughly 
fair  and  straightforward,  and  when  he  knows  that  his  neighbor  is 
not  getting  any  other  advantage,  he  will  have  no  objection  whatever. 

SECOND.  Cargo  owners  very  often  place  their  insurances  to 
cover  their  cargo  from  points  in  the  interior  long  before  they  reach 
the  ship,  oftentimes  for  a  period  when  in  a  warehouse  in  the  in- 
terior, prior  to  shipment  by  rail,  before  reaching  the  ship.  Such 
insurance  should  be  the  subject  of  separate  covers;  the  form  of 
policy  herewith  proposed  only  undertakes  to  cover  the  cargo  from 
the  moment  it  is  put  in  the  shipowner's  hands,  because  it  is  only 
at  that  time  that  it  really  becomes  more  or  less  involved  with  the 
fortunes  of  the  ship  itself.  There  are  many  shippers  of  cargo  who 
are  in  the  habit  of  insuring  very  large  profits,  some  who  insure  only 
a  moderate  profit,  some  who  insure  no  profit  at  all  and  other  ship- 
pers who  do  not  insure  at  all.  It  will  be  necessary  for  the  ship- 
owner to  force  all  to  insure  practically  alike.  The  policy  herewith 
provides  for  that.  Everything  must  be  insured.  The  cost  of  the 
insurance  should  become  a  part  of  the  charge  in  the  B/L.  In  other 
words,  shipowners  should  name  a  rate  of  freight  which  includes 
the  insurance,  and  if  the  shipper  of  cargo  shall  persist  in  insuring 
his  cargo  separately,  that  will  be  his  own  matter;  but  he  will  not  be 
permitted  to  recover  twice.  The  B/L  will  prevent  the  possibility  of 
an  outside  underwriter  who  insured  for  a  shipper  demanding  an 
adjustment  of  a  general  average. 

The  practice  of  the  insurance  all  being  placed  as  a  single  risk 
and  premium  paid  by  shipowner,  will  have  a  far-reaching  effect  in 
maritime  commerce  in  general  from  the  standpoint  of  the  shipper. 
It  enables  him  at  a  moment  to  calculate  the  advantages  as  between 

Page  twenty-two 


rail  lines  and  water  lines,  as  the  shipowner  by  his  broad  policy  of 
insurance,  arranged  with  a  large  body  of  underwriters,  is  able  to 
guarantee  the  fullest  possible  protection  to  cargo  and  to  practically 
take  cargo  at  one  end  of  the  voyage  and  deliver  it  in  good  condition 
at  the  other,  or  else  pay  the  damage.  It  relieves  the  shipper  of  cargo 
of  the  burden  of  carefully  inspecting  and  selecting  his  marine  in- 
surance from  so  many  kinds  of  policies  in  vogue;  he  could,  with  the 
above  arrangement,  make  sure  that  his  insurance  was  the  very  best 
obtainable,  and  thereby  reduce  his  risk  to  the  minimum  and  not  find 
himself  with  a  loss  which  is  not  claimable  from  his  underwriter. 

THIRD.  An  objection  will  be  raised  that  although  one  ship  or 
one  line  of  ships  shall  have  introduced  the  system,  that  cargo  may 
be  delivered  to  this  line  from  other  vessels  or  other  lines  that  do 
not  have  the  system,  or  vice  versa.  I  think,  however,  that  this  will 
simplify  itself  because  the  line  adopting  the  new  system  will  insure 
all  the  cargo,  no  matter  whether  coming  from  the  shipper  direct  or 
whether  coming  from  other  lines,  from  the  moment  it  comes  within 
its  custody  until  it  is  redelivered  from  its  custody.  Hence,  a  shipper 
who  has  occasion  to  employ  two  lines  in  the  transportation  of  his 
cargo,  one  of  which  uses  the  new  system  and  the  other  of  which 
does  not,  will  only  be  required  to  arrange  for  his  insurance  in  the 
ordinary  way  on  the  line  which  does  not  adopt  the  new  system,  and 
it  is  safe  to  say  that  if  no  greater  objections  than  I  have  foreseen 
come  forward  in  the  actual  working  of  this  new  arrangement,  that 
as  lines  adopt  it  and  the  advantages  become  apparent  it  will  be  only 
a  short  time  until  every  important  steamship  company  in  the  world 
will  be  using  the  same  method. 


f 


Page  twenty-three 


\ 


It  will,  I  think,  be  apparent  that  the  adoption  of  my  system  will 
have  the  following  results: 

Centralize  the  placing  of  insurances. 

Reduce  the  commissions  paid  by  the  underwriters,  or  reduce 
the  cost  to  the  assured,  or  both. 

Make  a  community  of  interest  among  the  various  underwriters, 
thereby  producing  unity  of  action  and  avoiding  confusion. 

Furnish  such  a  report  and  record  of  shipment  as  will  give  the 
underwriters  their  premium  on  every  item  insured,  which  they  do 
not  now  get  owing  to  carelessness  and  other  reasons. 

Every  vessel  or  line  of  vessels  will  be  rated  on  their  merit,  ac- 
cording to  results. 

Losses  that  now  take  years  to  adjust  will  be  settled  in  as  many 
months  or  maybe  weeks. 

Underwriters  will  not  require  to  carry  reserves  for  old  losses 
(guesswork)  for  years,  but  will  be  able  to  dispose  of  them  immedi- 
ately and  divide  the  profits  or  know  th«  loss. 

Shipowners  will  not  have  to  run  the  risk  of  bankruptcy  of 
guarantors  during  the  years  in  which  a  general  average  is  being 
adjusted. 

Cargo  owners  will  not  have  to  run  the  risk  of  bankruptcy  of 
their  underwriters  during  the  years  in  which  an  adjustment  is  in 
process. 

Vast  amounts  of  capital  now  customarily  tied  up  for  years,  such 
as  deposits,  advances  for  disbursing  general  average  expenses,  al- 
lowances due  to  shippers  and  underwriters  and  other  funds  will  be 
released  for  employment  in  productive  channels. 

For  forms  suitable  for  the  inauguration  of  this  plan  of  insurance, 
and  for  further  particulars,  address  : 

M.  C.  HARRISON, 

318  Merchants  Exchange, 
^  San  Francisco,  Cal.,  U.  S.  A. 

'  Paae  twenty- four 

Copenhagen  iaj6 A. PauHl 


Gaylord  Bros. 

Makers 

Syracuse,  N.  Y. 
PAT.  JAN.  2M908 


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2  1920 


